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tv   The Pulse  Bloomberg  July 22, 2014 4:00am-6:01am EDT

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>> the deal. the friends said they are set to cancel -- france said they are set to cancel a second warship for russia. the biggest stock market and in worl preparing to open to foreign investors. d our interview with the ceo of credit suisse. sediments -- the settlements and drag it down earnings. dragged downs
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earnings. welcome. we are in london. i am guy johnson. we begin with what is happening in brussels. eu foreign ministers are meeting today. the aftermath of the crash of malaysian flight mh 17. calls are growing for meaningful sanctions against russia. ryan chilcote is there. the ministers are in. they called on the way in. what did they say in what is he looking for in terms of what they will deliver? foreignthe british secretary has said the eu foreign ministers will weigh him posing a weapons embargo. that is one of the concrete things they will be looking at. we also heard there is time to act. there is a real sense among the foreign ministers that if they do not do anything today, they may lose fiath. -- faith.
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eu power. >> a given developments and clearly the duration of the situation it is a turning point. not only in the situation but our assessment. talking attacks across the border and terrorist acts. there is a real sliding scale of action they eu could take. one would be simply to publicize the names and companies that they eu tends to sanction. members met last week and decided they would do with a but did not publish the names of the individuals and companies. maybe we'll get to the list today and maybe there will be a ban on arms sales. that is something that will be discussed. what we do know is that there's
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already talk of another eu meeting as early as next week. it might be what we get today is an intermediary step. there is some sense that we get from the dutch they would like to see the bodies recovered and repatriation assess completed above for action is taken. and these countries have their individual concerns about what a retaliation or economic stations against the russian to begin with for their own economy. >> let's talk about their own economies and the risk that europe is taking care. we reference at the top of the show, the missile carriers, and a 1 --russia trading on training all one and the metta terry and. a second could potentially be canceled. -- training on one in the mediterranean. talk to us about what we can see
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today. >> we start with the ships. the french are in the process or ship dealdle of a 2 worth over $1 billion. they finished the first helicopter carrier and received payment for it and the russians are training on a one of them right now offer the french coast. the french president was asked last night and said that sale will go ahead. he said if there's a weapons give up the french will on the sale of a second ship which has not been completed and of which they have not received payment. he explained for us it pay russia back just over one billion euros if they reneged on the first ship. there are thousands of jobs at stake. hear the french president also say the british prime minister who he thinks is saying the pressure, to cancel that sell, should look closer to
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home and sanction himself. a real start of jibe. the horse trading that may be going on today. the biggest trading partner is germany. $8 billion worth of business with russia last year. that is clear how complicated it is. citizens it --8 the netherlands lost 198 citizens and that crash. we will be back with ryan a little later and continue the conversation. researcht at edison and he will talk about what it means for the french establishment jobs, money. this is not a move in the french will take lightly and also their reputation on the line as well. maybe the situation is for the french to make and we will be discussing that today.
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let us talk about company news we have been referencing. suites is under desk credit suisse is under pressure. let them go to zürich where manus cranny has been talking to the ceo. -- credit suisse is under pressure. . $2.6 billion fine. not affected the bottom line because it personas five everything about banking. by 3%.ting litigation and the numbers and margins. what the rich people are doing with a credit suisse on the wealth side may be putting more money in a today are not trading and that is critically important. i think the result the lies much
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bigger issues. belies much bigger issues. it is not in the bottom line yet. they are trying to reduce the size of the investment bank. one of the big issues is what might europe respond in regards to russia. brady douganith earlier. i asked him how difficult will it be for him to continue business. >> it is more than general on markets and attitudes toward investing and how opportunistically the geopolitical issues have had a pretty big affect on the markets and this year for the most hard. the id business? chris obviously, our business is primarily very global and and emerginge u.s.
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markets. certainly, the impact on the business and that particular parts of the world have an impact but relatively small. >> what about doing business with the wealthy russians on the wealth management side? do you think there is potentially risk with the dealing with the russians on the wealth side? we take a again conservative approach to doing our business everywhere around the world. i think that applies equally to business in russia and elsewhere. we will continue to have that approach. >> the messages were clear. whoks to the customers supported them and sorry for the behavior. in terms of government and what would change, he said they are focused. you that maybe they were not -- both on then wealth management side.
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saying they did not have as many fx or libor issues. they had a heck of a tax evasion issue. this is a ceo referred to as "the teflon man" by "the new york times." didn't strike me as a ceo who looked or felt under pressure in any way. what tips them over the edge. >> it's amazing how things can change so quickly. ceo'swas planning the 40th anniversary and he resigned. manus cranny. a gray looking to zürich.
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the been to the place and parts of the world recently that is sunny, saudi arabia. , your ever want to invest --am might come ture. true. they are looking to open up to international investors. big market and a lot of international investors would like to bid to get in. what is changing and how is the changing and when we see the changes? >> a lot of big investors are looking to get into the market for years now. speculation swirled about when it would happen. we know it will be the first half of next year. the official news agency announced the cabinet had authorized the allowable for foreign investors into the market and would like the cma
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decide. the cma said they will publish the rules for foreign investors 90t month and will allow for days to get feedback from investors and the public and they will review all of the endback i've the -- by the of the year. they hope the timeline, the first half of next year, the market should be open to foreign investors. >> and there are names we already know. fairly big names. there are some large, large companies listed on the exchange that are suddenly going to be available. >> absolutely. we have the largest petrochemical reducer called sabat, the biggest on the stock market there. you have aroche bank, one of the largest arab lenders. a lot of different companies that are fairly diversified index where a lot of different
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industries are in it. they have been keenan to ensure re a lot ofen to ensu the industries are in the market and available for investors which have been up for the longest time. there has been some foreign investment but pretty limited through etf, not very big. >> thanks very much indeed. it is getting a lot of traction in terms of our audience. exactly what the rules will look like. it will be a fascinating story. we will get a more. let us talk about what we have coming up. possibly willing to stop the sale of a second warship. how it will cost the countries. france is taking a big risk. the real-life "catch me if you
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can." he cashed $2 million in fraudulent checks and now works for the other side. the gatekeeper. frank will be joining us. we will see you in a few minutes's time. ♪
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>> welcome back. you are watching "the pulse." france said it's prepared to stop the second cell of a -- france said
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it's prepared to stop the sale of a second warship to russia if the eu imposes sanctions. how much would it cost? let us start off with the cost here. the french have been incredible reticent about making any kind -- we have russian troops training on one of them and the second is being constructed. talk to me about what it means. >> it is a very large contract, one point 2 billion euros. that is 15% of the entire dns. it is more profitable than that. s'last year,at dn they talked about how well this contract was going. 5% ofld've expected to be 1
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the profits of this year and next year and then a drop through. the palace owns a stake. 5% of theiry profits. 2014 and 2015. it really does have an effect. >> and lots of jobs? >> it is 1000 jobs. terms of the significance of the second carrier, suffers are already training with the russians in the mediterranean. it iscond carrier, different than the first. talk to me about why. >> this contract came, there were 2 carriers and an option for another 2. ultimately, the russians should be able to build themselves. they will have a majority of the technology. will not deliver the second but that's missing the point. -- it is almost like we will not
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deliver the second but that misses the point. >> these are sophisticated pieces of equipment. very advanced assault ships and can invade areas. they are incredibly sophisticated. not, anybody could build them and they cannot. your point is basically you get one and it does not matter about the second one. >> once you have one and you have the designed and technology. >> can they get out of selling the first one? >> they would -- it would cost france. they would have to pay a penalty clause. it'll be around one billion euros. >> would there be buyers for it? sophisticated a
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piece of equipment. is there another obvious buyer? >> they would have to give it at a discount or something but it would not be impossible to resell. and ownedhis be taken by that european union or nato? has it ever happened before? zone does notn have a record of that but nato does. they have a fleet. they are commonly owned. that is certainly possible. nato has a good track record. could be -- >> could be humanitarian? >> it colorful so you can use of most things. >> there are alternative uses. anyn any piece -- almost piece. s have french and italian
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exposure. >> the italians have been pretty close for the past decade or so. at first i was a military trainer. m346.ame the 300.have sold an initial there is an assembly line to produce those. ane concern about there is assembly line for western helicopters out in russia now. they're the ultimate piece of equipment. they become military pretty quickly. >> in terms of the defense establishment, when you look at helicopters, army personnel carriers, how likely
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do you think they will be making this decision? >> it is big, big business. i am concerned there has even been a tiny compression from france. if we were having this conversation in the middle of france, i would say there was no chance of this deal being changed. deliver,cides not to but if ipo money, -- but if i put money on it, i would say they would deliver the first and hold off on the second. >> thank you. we'll take you inside the top-secret plan. this is the first time ever it has been on television cameras. to see be fascinating what happens inside of this building. what they got up their sleeves. we will discuss that when we come back. ♪
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>> good morning and welcome back. you are watching "the pulse." let me show you some photos. wing ll hosted its first suit competition. how do they come up with this?
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amazing pictures. how on earth? it will look like this. some people in canada came up with a new diving. withlaunched themselves the help of a swing having mastered the somersault. and midair catches before hitting the water. nice. uk has hosted the sixth round of the grand. that is good. all of the tir -- tricks. the markets the how are doing. jon ferro. >> or geopolitical risk, stocks go up higher. higher on the dax.
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ministers and the brussels. how do the u.k. go to the party? .t remains to be seen a compromise. the big earnings story came from arm holdings. the stock is up by 3%. of the royalties side of the business. you see a slowdown. on the licensing side, you see it move higher, much higher. a strong flow the royalties side. i spoke to the ceo this morning and he seemed confident about it picking up in the second half of the year. watch out with what is going on with russia and the ukraine. it has been a minimum. you see the dollar moving higher to a one-month high. it could be geopolitics. cpi will come out later. inflation is one to watch. >> the fed will scratch their heads.
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credit suisse, a conversation with the swiss bank's ceo. the fine has the bottom line. that is coming up. we'll see you in a moment. ♪ .
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>> good morning, everybody. welcome back. you're watching "the pulse." we're arrive in bloomberg's european headquarters. i'm guy johnson and these are are the top headlines. saudi arabia is set to open up its stock market to foreign investors. it expands the arab world's biggest exchange to money manufactures. indonesia is set to declare jakarta's governor the winner of the closest presidential
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lection in a decade. police and politicians are calling for calm after his opponent flagged a potential challenge to the volt. the foreign exchange story is interesting. we'll bring you more on that later. and e.u. foreign ministers are meeting in brussels today to discuss further vanks against russia after the crash of the malaysian aircraft. sanctions on russian energy companies including rosneft. to zurich now. credit suisse shares under pressure this morning as the bank posted its biggest quarterly loss since 2008. remember, they paid $2.6 billion to settle a u.s. tax investigation. manus cranny sat down with chief executive brady dougan and
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started by asking him about the size of the fine, which is enormous, actually surprised him. >> obviously this has been a very long running issue for us. these are events that happened a long time ago. we spent a lot of time fixing this business and cleaning it up and spent a lot of time actually working through the resolution. i think that was long sweep of time for an issue like this. i think we ended up -- obviously as you say, it was a very significant fine. most importantly for us is getting it behind us, something very, very important for us as a business. obviously this is our biggest litigation or regulatory problem out there. >> it is about you, your tenure at the bank. it calls you the teflon man. in other words, you as the c.e.o., you're still standing, brady. here is a guilty play.
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there is $2.6 billion of a fine. do you feel you personally should take more responsibility for what has happened? >> well,s as i say, these are issues that were not created on my watch. it is something where this management team worked very hard to resolve the issues. we had an honorable resolution to them. we didn't require any emergency law from swiss government. frankly it has probably been the single issue that has taken the most time over the years to resolve. it was important to get a resolution for the bank and i think we did so honorably. i want to do what is in the best interest of our employees, clients and shareholders. that's what i plan to do going forward. >> you think -- continue in the role absolutely focused. that is your intention, brady? >> we have a lot do.
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i think particularly getting this behind us. we have a very good future in terms of, you know, continue to drive the strategy. i think we're doing a great job for our clients. i think we're going to be able to do a great job for our shaileds. >> what a government's point of view, you were on the executive board from 2003. what have you learned over this investigation that needs to change from the top to make sure this kind of incident doesn't creep in again? >> i think it is one of the things that i think has been one of the more important focuses of us for many years is making sure we're running a very compliant business. if you look at our record, i think we have a pretty good record. we haven't had any issues on the libor side. we actually i think we have learned a lot of lessons and continue to work very hard to run a compliant business. that is an everyday challenge. something you have to go work at
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and try to tackle every single day. i think we have had a pretty good record of that and that is something we're going to continue to be very, very focused on. it is the right thing for the shareholders. we have to run a very compliant business. >> brady dougan, the c.e.o. of credit suisse talking about how his business is a very compliant business and how tough that is. right. let's talk tech. arm seeing its revenue hit by a slowdown. license revenues picking up and it looks like things could get better in the future. let's find out what's going on here. money now looking a little weak. licensing revenue, which points to better stories down the road, getting better. >> exactly. and this does hint at some of the concerns we have talked about in the developed world. saturation point when it comes to smart phone. just a meager 1.2 billion units. up only 19%.
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oh, woe is us. clearly there is a slight slowdown in smart phones. royalties up 2%. they are really not particularly strong but they have warned analysts to brace themselves for this. license design. this is when they sell a design to a samsung to an apple that i might use in two or three years. there is growth in other areas. they feel they should be looking more at the license side of things. >> from what we have seen talking to our customers and going on in the markets, there are definitely signs this is going to pick up in the second messagede expected and consistently for sometime. that has been happening in our customers in q 2 and q 3. we are expecting to see a bit of
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moment numb royalties in the second half. >> a certain rather large smart phone maker is due to be launching a slightly larger phone. with licenses up 42%, 41 signed in the last quarter. >> i find license deal with you. you are going to use my technology, you pay me a lump sum. every time you manufacture using my design, you pay me a royalty. >> a little schmidt general. -- smidgen. the future is about being in the internet of everything. they are seeing obviously perhaps more smart watches coming to them saying we want to have a chip in them. what is the is phenomenal. the power they have managed to get in very, very small chips and also how this is going to
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grow around the world not only in the devices that consumers use but in the devices that industry uses and the device that councils use when you go to the armed offices in cambridge, all the lights within their car prarts linked up to the internet already. they can sense when people pass by. this is something that is going to grow and grow. they keep up this internet of things, that that will boost in years to come where their royalties will come from and where their license sales will come from. he is saying we're getting new and more exciting device. >> i'm not particularly excited about street light. i'm very excited about -- >> i can remember you saying this. >> barcelona already has it. they can tell which bins. it makes it that much cheaper.
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>> caroline hyde is very excited by it. let's keep talking tech. the service tab slet the key for the future of the company. an elite team of designers, engineers spent years to equipped to. so why has it struggled to sell? cory johnson is the first journalist to get a look inside the surface labs. >> inside secretive surface labs at microsoft, you see one thing. the original design was a big change from microsoft business as usual. >> this is not something where it was within our d.n.a. 20 years ago. it is not in our d.n.a. 10 years ago. >> hardware design with improvement over many years. >> this is not one of these things where we just started nine month ago and came up with a great idea.
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the design tools are a sight to behold. like this cnc machine. >> you're starting to see it come to life here. this is our model shop. >> the model shop uses all kind tools, 3-d ower printer, acrylics, metal. microsoft's first tablets surfaced in october 2012. it led to a $900 million write-down. product has gotten better and market share, still low, is quietly growing. >> this is a hinge for the microsoft surface kick stand. they had it milled here at the machine shop in washington. to get a real sense of what it would look like and feel like and sound like when they made the actual kick stand at a much smaller size, they knew what
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they were getting into. terror make the third time a charm, surface three has got to get everything right. rate.rate, it and it gets skinny. >> tens of grams are huge for us. >> thousands of man hours went into designing this stylus. >> turn it into digital. >> all of those it rations and inventing have given microsoft what they think is a productivity tool to replace the laptop. >> until you get to that perfect piece where you go this is it. >> amazing stuff. >> the lengths people go to make these things work or not work. sometimes they do, sometimes they don't. remember, microsoft reports results later today. we'll see what this means for the bottom line. we'll bring those numbers to you as soon as they hit today.
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we're going to take a break. what are we going to talk about afterwards? is it business as usual in srael? we'll see how companies are coping with the conflict. we'll do that when we come back. ♪
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>> 45 past the hour. welcome back. you're watching "the pulse." you're looking at live pictures coming to you from gaza.
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you can see -- it is hard to see them through haze. you're looking at smoke that is coming from a number of sites in gaza this morning. fresh explosions being felt, reporters and journalists across the strip talking about the fact that they have been hearing a series of explosions throughout the morning. the conflict continues. the death toll counts. john kerry is in cairo seeing for a truce that will end hopefully violence in gaza. israel says it will fight for as long as necessary, though, and hamas said it won't accept an unconditional cease-fire. how is this story impacting israeli business? let's take a closer look at this. of a founder and c.e.o. company focused on israeli start-ups. good morning to you.
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the pictures seem to be fairly dramatic from your part of the world now. it impacting business? is it business as normal or something different? >> it is really a tale of two cities, i'm afraid. you look behind me, you see the other picture of israel, the normal picture of the tel aviv skyline and our beautiful seashore. other than the fact that this morning there was an alert where i had to go seek shelter for about three minutes in the middle of a business meeting, the impact on the business scene here in tel aviv and the rest of israel has been minor. there are two parts of our economy that have been hit hard. tourism and hospitality. planes and hotels and retail is down. israel's economy is a high-tech economy. based on trade. about 80% is import/export based. it is business vurble for the bulk of israel's economy. the best indicator of this is the tel aviv stock exchange, the
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ta 28. you probably reported to your listeners and viewers, actually the israeli stock market is up, believe it or not since the outbreak of hostilities. this would be rather remarkable had it not been this kind of pattern over the last 10 years each time we start hostilities. the tel aviv stock market has been a bullish sign every time we go to war. i'm not saying there is an economic reason for this. the reality is our high-tech sector is resilient and used to this and business as usual. it is not actually better than ever relative to some of the numbers coming out of the tech sector. >> you tell us about the tourism ndustry. fairly obvious example of one area affected. counts d to argue the as fact chal.
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the fact that the business is used to this and carrying on as normal might suggest that actually there is quite a big discount built into the system. an expectation that we are going to see every few years, one of these types of events and actually the business would do better if you were to back that story out. business is carrying on as normal but that normal is at a lower level because of the fact that we anticipate these events will take place. >> look, i think there is no question that some day, god willing, peace breaks out and there will be a huge boom and long-term run on israeli equities and the economy. but remember, israel's economy, even with this drag of every so many years some kind of military conflict has been on a tear over the last 10 years. our average g.d.p. growth has been over 4.5%. it is the envy of the western
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world. our markets are the best performing markets named by your organization over the last decade. right now, we're quite happy with what we have got. >> how strong -- john, how strong would it be. great, you have got a 4% number. how strong do you think it would be if this risk didn't exist? 5%, 6%, 7%. you talk about a boom. what kind of a boom would there be? >> i think it could be that kind of number. i think we could definitely gain a couple of points. the analysis is by the way, this war will cost us about a half a percent in g.d.p. growth this year given the impact on the tourism and retail industry. the long-term trend here, i want to bring an example of something important that happened in 2006 during the lebonese war where warren buffett, obviously not a big risk taker, the kingor value and judicious investing.
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he made the biggest investment he had made outside the united states here in israel in the middle of our last july war in 2006 when he spent $4 billion to buy 80% of iskar. it was literally 1,500 meeters from the lebonese border. when he was asked by questioning investors what was he doing, he said this is a great long-term investment. familiar forward six or seven years, he completes the purchase of the company and paid twice the amount of money and the long-term trend is to the right. my sense is that god willing this will end the next couple of days, maybe a week. then business goes back to normal and normal here is in the second quarter, $920 million were invested in israeli start-ups. we're on track for a $3 billion a year in the start-up economy. this coming week or two, we're going to see the i.p.o. in wall street of one of israel's
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leading companies, it is going public at a $4 billion evaluation. that is the story coming out of israel's business sector. the background that you see behind me, the sky lined sea story.s the real >> i was wondering how many of them were tourists that are going to be enjoying the beaches behind you. that is something maybe we'll find out further down the road. we have run out of time. thanks for your time. we're going to take a break and be back in a couple of minutes. ♪
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>> welcome back. you're watching "the pulse". it is time for today's new energy and e.u. forum meeting in brussels today. they are discussing further sanctions against russia. harsher penalties. what are the implications for the energy markets? they are talking about energy markets and defense markets. let's ask our guest. he has been watching this story very, very carefully. we have spoken about this before. before mh 17, the chances of a significant disruption to the gas relationship between europe and russia were minimal. >> the risk is growing. absolutely. i think this is a big effect. we're still seeing the fallout from it.
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i think one of the key things here is does it make it more likely that we see sanctions on gazprom? one of the key things is gazprom has been excluded. europe has pushed really, really hard not to have gazprom -- gazprom is owned by the russian state 51%. not having gazprom on there has been a big thing and the big thing is will this weaken the resolve of europe and increase their ambition to put really punitive sanctions on that and that would include gazprom and that changes the risk of gas supply. >> do you think it changes the long-term dynamics? europe becomes more concerned. every time we see an event that escalates the tension between west and east, every time we see something that could destabilize our energy future, do you think we end up moving away from russia? >> absolutely. i think one of the big problems for russia and the thing they
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are going to have to deal with from the whole crisis that has been around russia, crimea and the ukraine is this damaged relationship with europe particularly on things like gas supply. this is a pipeline meant to enhance european security to supply by going around the ukraine. ukraine is a problem buyer. don't always pay their bills. leads to disruptions once in a while. now the e.u. is pushing back which is already in construction. saying actually we're not sure, we're not sure about the regulatory regime on this pipe linde not sure we want to see it continuing to be built. >> does it include chance s of more shale? >> yes. i think it certainly increases the discussion around shale. shale is really interesting. it is a difficult play. you have a lot of local disruption and opposition. will this help? i'm not sure. >> we'll watch. nice to see you, trevor.
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we're going to take a short break. focusing on bloomberg radio, "first word" is up next. i'll also see you in a moment. ♪ >> france is prepared to cancel
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its warship to russia. we are live in brussels as foreign ministers meet to a sanctions. a slice of saudi arabia. it opens up to international investors. we will talk about that. ceo as aview with the massive tax settlement hits the bottom line. welcome back to "the pulse."
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a warm welcome to you just waking up in the red states are in i am guy johnson. we are live in a bloomberg european headquarters. we will begin in brussels. the prime -- foreign ministers are there. they are meeting in the aftermath of the crash of the malaysian airliner. they are talking about harsher sanctions against russia. the minute they are in the meeting, what can we expect the outcome to be. >> it is not entirely clear that every one of the 28 eu countries backs action it today. it is clear the vast majority of them do. we just heard from the british foreign secretary saying he will push for an arms embargo on russia. this meeting is an opportunity to send a very clear signal to russia. it we are pleased that there is dealing with the
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victims. we are pleased that their is some access being granted to the site. this incident happened in the first place because of russia's support of the separatists in eastern ukraine and because of the flow of heavy weapons from russia into eastern ukraine. we have to address that issue today. my colleagues and our partners should send a very clear and strong signal to russia. it will be interesting to see what signal they come up with. there seems to be a sliding scale of action that they are discussing. we had the czech foreign minister say that an oral warning might be enough. they should be given several more days to adhere to the ee use wishes before sanctions are imposed. -- there does seem to be some progress on the ground in ukraine.
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they are repatriating the bodies. 282 have just arrived in a city under ukrainian control. they will be put in a plane quickly to the netherlands where they began their journey five days ago. simplys another option to announce the names of the individuals and companies that are to be sanctioned by the european union. they agreed that they would impose sanctions on individuals and companies and announce that list by the end of the month. they could do that this week. they are well within their mandate to do that. there could be a weapons man. there could be sec coral sanctions. europeanto look at the costs that each economy might have to pay. there is some reluctance to that sort of thing. >> the numbers are big.
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we talked about the carriers that the french are selling to the russians. billions are at stake. the dutch have significant exposure. the french have exposure traded the italians have significant exposure as well. >> the germans at least by our or theid $88 billion business with russia last year. that is a lot. we talk about the economic powerhouse that germany is. that is true. they have 6000 companies active in russia. the netherlands did about half the amount of business as germany. a lot of russian companies are incorporated into the netherlands and that might change the actual dynamic. it is a real number. it points to the quandary that the dutch are in with 193 of their people killed in that crash. there is the french. they are saying they will forgo
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the sale of that second helicopter carrier. he would go through with the first one but forgo the second if there was a weapons ban. that would mean saying goodbye to hundreds of millions of euros in revenue for france. you don't need me to tell you what is going on in france with the economy and industrial production. we did hear from the french president saying he is prepared to do that. he would like to see the brits do more themselves if france agrees to take that step. >> thank you very much indeed. he is in brussels for us at the ministers meeting. let's turn to our top company stories. bank has suffered its biggest losses since 2008. talking toy has been the ceo. let's get the highlights of that conversation. ati think when you look these numbers on the surface you say that is investment banking.
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the numbers are coming off a little bit. on the face of it there is litigation. they haven'ts, dumped into credit suisse just yet. reduceion is trying to the risk. the negation has that impact and margins on the web management. we started the conversation with asking were you surprised it was $2.6 billion? >> this is the long-running issue for us. these events happened a long time ago. of time fixing this business and cleaning up. we spent a long time working to the resolution. i think that was obviously a long sweep of time for an issue like this. was a significant fine. it was very significant on the
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business. this was important for us as a business and this was our biggest litigation out there. getting it resolved was beneficial. >> there was an article in the new york times about you and your tenure at the bank. it called to the teflon man. you are still standing. and $2.6a guilty fee billion of a fine. take more responsibility for what has happened? these are issues that were not created on my watch. it is something that this management team worked very hard to resolve the issues. we had an honorable resolution. we did not require any emergency law from the swiss government. this is been the single
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issue that took the most time for this management team to resolve. it was important to actually get a resolution to the bank. i think we did so honorably. i feel very good about that. i want to do what is in the best interest of our imploring us and our clients and our shareholders. that is what i plan to do going forward. >> do you think that is to stay at credit suisse and continue in the role focused? >> we have a lot to do. we have a very good future in terms of continuing to drive a strategy. we are doing a great job for our clients. i think we're going to do a good job for our shareholders. i am very enthusiastic about that. >> not on my watch. things did happen on his watch. the bottom-line is i walked out
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view isinterview and my that he is there to stay. he is moving on and doing business and readjusting the investment bank. it is about governance and compliance. he said they don't have any liable risks. you know howt, this is, they will back you so long as they are seen a return on equity in your capital is fine. back to you. >> this is is about where the buck stops. it does seem to the buck doesn't stop anywhere at some point. there are some interesting pieces being written about the teflon man at the moment. thank you, manis, indeed. if you're trying to invest in the saudi stock market you know that is difficult. that is about to change.
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it is opening up to international investors. bloomberg news reporter joins us from zurich. you either had to be saudi or you had to be from the gcc. >> this is changing. it yesterday the announcement came on the news agency website saying the cabin has okayed the mood to allow -- moved to allow. they are going to be able to buy stocks directly. the cma came out and said that they are laying the groundwork for how this is going to work. they said they are going to open the market in the first half of next year. we understand that this next month they will issue certain rules governing how the investors will get into the market. they will wait for feedback. they will review the feedback by the end of this year.
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this will come to a head hopefully by the beginning of next year. the us is exciting for investors inside and outside saudi arabia. they have been waiting for a long time. the stock market is pushed through the 10,000 point level for the first time since 2008. so far saudi arabia is doing that because it wants to get the economy away from oil. they are spending over $130 structurestelecom and roads and bridges. this plays into that. >> you talk about some of the areas in which they exist. talk about some of the names we are talking about. these are big names. >> absolutely. you have the largest chemical maker in the world. largest one of the islamic lenders in the world. you have kingdom holding company
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. it is owned by a billionaire. they have stakes in hotels and so on. you have construction materials companies. you have telecoms and marketing. diversityuch more across the gcc. >> thank you very much indeed. she is joined us from the gulf. you have seen the film. now meet the man. the real-life catch me if you can a character will be with us. he will be joining the pulse later on in the program. we are going to talk about real-life fraud and how your company is at risk. it is going to be a fascinating conversation. make sure you don't miss it. taking your mobile for a spin.
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how google and apple are revving up the battle to bring their tech to your car. we will see you in a moment. we will be back after these short messages. ♪
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>> gazpro welcome back to "the " let's talk what is happening in the currency markets.
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is where we are trading right now. that is the year to date low. we are getting into some interesting levels. there is a bit of an airpark it -- air pocket the could drag us down further. this is interesting. it is interesting for the foreign exchange market. this tells you something about flow. flow into european assets looks like it might turn a corner. that has not been the case. this canary in the coal mine should be the euro/dollar rate. if that flow reverses then that could have interesting implications further down the road or policy with the ecb. take a look on this one. we are three points away from the year low. let's get back to one of the stories we are focusing on and
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spending a lot of time talking about. of dutch nationals on is malaysian airline jet prompting the nation to call its prime minister for action. are we going to see action? will that mean for the business ties to russia and with president vladimir putin? good morning. the dutch had a close relationship with the russians. them to behile for angry. he knows the relationship and understands how difficult it is to change it. are we going to see a change question mark not to ben't be seen taken any action the face of what is being planted on russia by the u.s. and ukraine. it was perpetrated by russian
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separatists. extent is the question. we are likely to see some action coming out of this meeting with the foreign ministers. it's actually with the german foreign minister calling for strong action. we are more likely to see some measures rather than broad-based sectoral sanctions as yet. >> the people in the netherlands are angry about this. dutchch pressure will business be putting on politicians not to do anything too hasty? are they in line and on the same page as the public? >> given the tragic nature of the event, they are going to have to be on board with whatever the government decides. the netherlands has more exposure in russia than many european countries.
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it is their second-largest trading partner. dutch energy companies are working with russian companies on some projects. there is poor construction going on. this is going to be a challenge for businesses. the extent of economic interconnection is largely defined by financial flow and not just correct investment. >> it would be tougher dutch businesses to complain about sanctions if they were to be imposed. in terms of the way the relationship moves forward from here, is this a defining point? or will it be back to business? trend changep or a or? >> we have seen a marked deterioration. it will be difficult to build
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trust between the two sides. i don't think we will see normalization necessarily quickly. >> they seem to be in the same direction. how much more difficult will it be for them? >> the dutch had initially sided with the germans when it came to pursuing talks with russia versus tougher sanctions. the germans and dutch were following the same line trying to hold back on harsher sanctions. sense of get a solidarity when things like this happen, companies are affected and as result they're going to have their bottom line affected by what is going on around them. we were talking about the impact on israel he business and how that changes investment perception. how does business and
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geopolitics fit together? can we understand how it works? >> that is a massive question. business does not always follow the political lead. clearly business interests i .ontinues to invest you have strong connections with bp. those relationships are likely to continue. in the face of an event like this, inevitably there has to be some compromise reached. >> it is difficult to analyze. thank you very much indeed. come, details about the electric car makers 100 million dollars investment of come back. we will see you in a moment. ♪
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>> welcome back to "the pulse." we are streaming on your tablet. we are heading in different directions on carbon pricing. the u.k. has a blueprint for
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reforms of the emissions system. it is more aggressive than the european partners. where does this leave this? let's start with the u.k.. we will talk about australia in a moment. more aggressive than the rest of europe. how does this resolve itself? do we go with the u.k. model when the rest of the european economy is struggling? >> that is the crux for the eastern european countries. they are not sure now is the time to go really hard. the u.k. is pitching this argument that if we go early then it is a lot less expensive. in commission proposed january to set up this stability toerve, the u.k. wants cancel these permits entirely. that would take them away from industry. it would raise prices.
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the other interesting thing that the u.k. is considering is expanding the coverage of the carbon market at the moment. it is half the economy. they are talking about covering. expense would be gasoline. that is politically different -- difficult. australia has basically attempted to repeal most of its laws.e protection the prime minister has failed in a few areas to get what he wanted. is still pushing for a carbon market eventually. that carbon market may only come into being if certain conditions are met. those include whether china is a trading partner and bring them in as well. >> we are going to leave it
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there. thank you very much indeed. we are going to take a break. we'll be talking to the real-life "catch me if you can there go see you in a moment. ♪
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>> welcome back to "the pulse." we're live from bloomberg european headquarters in london. i am guy johnson and these are the top headlines. declare the said to winner of the contest for the presidential election. this is the first one in a decade. it was neck and neck with the main opponent. arece and politicians calling for calm after his opponent flagged a challenge to the votes. arecurrency markets
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dipping. foreign ministers are in brussels as we speak. they are discussing pressure from united states to expand sanctions against russia. study arabia is opening up its stock market to foreign investors. this expands the arab world's against exchange outside the ttc. -- gcc. it has doubled the emerging markets index. let's stay with the marketing. how are we doing? jonathan ferro what tell us about the european markets. i am not seen that in this market. the eusday focus is
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foreign ministers meeting in brussels. are they going to take anymore action against russia? a lot of rhetoric of the weekend. as we got closer to the meeting itself, they lowered expectations. semi conductor and chip designer will disclose not so strong licensing growth. i spoke to the ceo. the licensing growth is going to filter through to the royalties eventually. 5.76%ock is picking up by as we speak. a break belowr is 135. it is down by 0.85%. you have inflation above 2%. the highest since 2012. this is something for janet yellen to think about if it continues to climb.
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this is the february 3 at low. keep an eye on this one. >> all morning. it has been moving down sharply. thank you john. jonathan ferro is on the markets. takeover accounts maybe the next big threat. we will find out what that is a moment. this is going to be the source of $5 billion in losses globally. that may hit u.k. financial institutions. you may have heard of this man before. frank abagnale joins us. he is a former professional imposter and the author of the best-selling memoir "catch me if you can." the frauddvisor to prevention company. founder. us is the
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good morning, gentlemen. it is very nice to see you both. what are we talking about? about a caplking takeover and credit card fraud. i was here about 10 years ago today press conference about identity theft. the response for the media the time was we don't really have that problem in great written because we don't have a number that identifies our citizens. it became a very big problem. >> we are talking about it now. >> i am back again to say you'll ask aryans issues that have happened in america like a cap takeovers. i have been at the fbi for 38 years. i felt he was the most knowledgeable person i had ever met what comes to cyber crimes. i encouraged him to start his own the company develop technology to defeat some of
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these problems. he has basically done that. i am here just to support him in that he is come up with great technology for numerous banks and airlines around the world. they have had the success. we want to talk about the problem and how they deal with that problem in the technology. look, account takeovers, we know about her personal data. we have learned about this one. we are aware of the risk that poses to our personal data and information, it can lead to our bank accounts being exposed. , the thought that they would have enough resources and understanding and advice to be able to be further down the learning curve.
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you are telling me that they are not. >> bank robbers go to the highest account. there are a lot of accounts with small volumes. if you want to rob them you have to rob a lot of them. if you go higher up the food chain, that is where bloomberg keeps its money. which account would you try to target? he robs bankssaid because that is where the money is. the same thing happens with the internet. the attackers are going after the corporate accounts because they are the biggest accounts. the sophistication level has come to areas never seen before. what frank and i are trying to tell everybody is watch out. one of the things that you guys are talking about is the danger of once bitten twice shy.
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you get hurt with this and then you look at every transaction. you look at businesses in a different way. aok at transactions in different way. that is bad for business as well. you want the legit ones to work. >> worldwide you lose about $40 billion a year in credit card verifications were you turned them down but they are actually good cards. if you are a little suspicious of that card. technologythings does is determine that is the actual person and they are real. >> you get a phone call that says we are not expecting this. this is an algorithm throwing up a red flag saying that should not be happening, that is not normal. developed -- we
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can deploy our software all over the world to --. it is you and your computer shopping. golet that transaction through so we're not losing revenue that we would have gotten. this is around $40 billion a year that is just dropped on the floor. >> this is just me talking personally. when i go to united states, people still ask me to sign my name and i am generally stunned by that. we don't write checks over here anymore. the old school technology has moved on. is that true the corporate landscape as well? our europeans more sophisticated at this? is the united states behind the curve? >> i have been coming here for .he last 30 years they're much more security conscious here than americans
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are. they are proactive. they think about how they can prevent things instead of waiting until they happen and coming up with is a solution. they don't track people as they do in the united states. there is more personal information on facebook. they thought we will never allow that. i am not on facebook or any social media. >> is that a security thing? >> there is danger when they are not used properly. we use a software where if i take a picture of you in an airport i am on your facebook page to facial recognition. it does not matter. it is on your facebook page and you tell me where you are born on your date of birth. i have stolen your identity. there are many things you can do because of technology. limit the amount of information that you put on them.
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then it becomes a safe to let a good tool to have. >> we should take security seriously. highlighted, people are able to access information about us. most iconicof the figures when it comes to security. we have seen the film. we know your background. how do we get people to take it seriously? people to take it seriously before they are bitten? educateieve you have to people. you have to explain to them what their risk is. you have to do it in a simple term. once they understand the risk they are smart enough to make changes. most people in the world are honest. they don't think in a deceptive way. when they get a phone call or an e-mail they are not thinking about how someone can get
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information. i think that way constantly. i want people to educate themselves. they will take the steps to protect themselves. >> how has the world changed? ago is i did 50 years 4000 times easier to do with technology. for me to print checks 50 years ago i needed a heidelberg printing press. i open up the laptop and i pick a corporation and capture their corporate logo and put it on a check and call the bank. it is so simple to do. if i called the company and ask for their wiring instructions they would tell me where they bank. i would have their account number. if i wanted a copy of their signaturesrt, their are there.
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you can skin it and put on the check. the technology has made it very simple to do. it gets easier all the time for the criminal. >> it is not the check technology. technology. kind of we live in an information world where we give away too much information and criminals have learned to use it against us. systems thated listen to how frank thinks. he is one of the most fascinating people i've ever met. you put that into software that protects any enterprise including banking. >> thanks for spending some time with us this morning. it was nice to see you. they have set up some incredible technology. they are joining us from 41st parameter. that took a little longer than we should have done.
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you are back in a couple of minutes. ♪
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>> welcome back to "the pulse." ever wish apps could seamlessly sync up with your car? you won't have to wait much longer. apple and google have announced programs to integrate their operating systems into your car.
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sam grobart went to find out more. google are not happy living just on your phone. they want to take over your car as well. they announced programs to enter -- to integrate their oses into dashboards by plugging your phone into your vehicle. plate andcalled car googles is called android otto. what you connect to the car your car in dash display becomes a mirror for many of the apps on your phone. things like navigation and phone calls and text messaging and music services will now come from this and not a hard drive under the dashboard. every automaker in the world has announced compatibility with at least one of these programs. the good news is many will support both. google, this is
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another way to get you to use more of their services. they don't want to lose you because you are sitting behind a steering wheel. automakers are happy because they been trying to cram more and more tech into their vehicles and the results of been mixed. there is a payoff for consumers as well. the confusion and frustration of using a new interface will soon be a thing of the past. you can get new technology without getting a new vehicle. it new features will just be a matter of a download another trip to your dealership. >> getting directions to geneva. >> you will be safer. using that interface you already know will help you have less distractions of the road. until cars can drive themselves, at which point you can text the way. >> directions to geneva. that could be a long journey. are you going to drive and android car or an ios car? these are things to hammer out.
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the chip designer from the u.k. will be embedded in this. that looks lovely. we're going to be talking about the future for this company when the numbers start to come through. caroline hyde has been a tracking the action. there was an increase in license fees. wants to company license that they pay you a big lump of money. >> when they start to use that chip and embedded within the latest apple phone or samsung tablet, you get a smidgen of the revenue. there is a direct feed of money every time a chip is used. we are shipping 1.2 billion
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.nits, it adds up very things are certain to ease away. we talk about smartphone saturation. a measly 19% growth is expected. we are seeing a little bit of a slowdown. royaltiesng to see pick up the longer term if their licenses are on track. that means two to three years down the road royalties will pick up. think about a two to three year. between a customer signing a license and that going into production and yielding royalties. today, they signed are driving future royalty growth. we concentrate on the deals we close. we concentrate on the designs that we get. base of licenses that are yet to produce royalties.
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we design the licenses at a high rate for many years. we believe there is a kind of went up royalty flow will come over time. >> they are 95% of all mobiles. the growth is going to be another connected devices. the technology is going into new types of equipment. brand-new product. we know apple will have a new iphone on the shelves in autumn. this is about your smart phone. many a dustbin a driver will have an easier night sleep. caroline is very excited about dustbins. we are going to take a break. we will leave carolina to ponder that one. we will be back in a few minutes. ♪
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>> welcome back to "the pulse." look behind me. we have seen an interesting morning when it comes to euro-dollar. where is the year low? 13486. this has been declining for a couple of months. i will move myself out of the way she can see what is happening. it that is the year chart.
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look at the flow. look at how it has changed as we have come down. we are now on a downward trajectory. our international investors less european of the i story? we will keep track of this one. we are one take away from it. if that happens we will tell you. let me tell you about what is going to be happening for the rest of the day. the first one is in brussels. more sanctions for russia possibly for russia. in brussels. but start with you. you are watching foreign ministers meeting. what are we expecting? >> normally they wrap up around 3:00 p.m. local time. this is a tough one to call. we saw some tough talk going into this.
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they may be ready for sex oral sanctions. -- sect oral sanctions. sect oral we have the idea of adding names and companies to the sanctions. we have heard the czech foreign minister say that they should have a few more days to comply with what the european union wants. this is a tough one. they have to sing from the same hymn sheet. they have to make decisions unanimously. they are not speaking unanimously just yet. they have a few more hours in the room a. >> thank you very much. let's turn our attention to gaza. -- shows nos those sign of slowing down. >> we are expecting more people to die during the rest of the day.
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to put it bluntly. about 570toll is palestinians and 29 israelis. the health officials say the top estonians -- palestinians are noncombatants. the u n secretary-general is expected to be meeting with prime minister netanyahu to throw some weight behind the egyptian cease-fire proposal. he does not need convincing. they accepted it last week. oh the militants rejected. john kerry is in the region. he says hamas needs to make a decision. it at least according to john kerry, the ball is in the court of hamas. >> we will even there. thank you very much. that is it for "the pulse."
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tomeillance is up next with keene. you can follow me on twitter. i will see you tomorrow. ♪
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>> this is bloomberg "surveillance." --european surveillance european foreign ministers meet in brussels. will vladimir putin face further
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sanctions? the netherlands awaits the bodies of those from flight mh17 . in gaza,continues secretary john kerry seeks a cease-fire in gaza. tuesday, july 22. i am tom. here's adam johnson. >> eu foreign ministers considering a blacklist of associates. -- companies accused of profiting from ukraine's troubles. this keeps going. >> case involving. there was a set of good do's that moved us forward. budget deficit little changed. there has been one of the big stories. governor mark carney, bank of england governor six weeks ago telegraph into the markets,

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